Crypto Industry Witnesses $55 Billion Capital Outflows in August, Bitfinex Report Finds
Summary:
Capital outflows in the crypto industry reached $55 billion in August, as revealed by a report from Bitfinex. The analysis shows a trend of capital outflows and highlights the impact on Bitcoin, Ether, and stablecoin liquidity. Event-based volatility and the performance of Bitcoin open interest are also discussed. Additionally, the decline in Ether futures and options is addressed. Overall, the report sheds light on the current state of the crypto market in terms of capital movement and market dynamics.
According to a report released by crypto exchange Bitfinex, capital outflows in the crypto industry reached $55 billion in August. The report analyzed the aggregate realized value of Bitcoin and Ether, along with the combined supply from the top five stablecoins. It reveals a prevailing trend of capital outflows that began in early August. Over the past month, approximately $55 billion was drained from the crypto markets. These outflows not only affected Bitcoin but also impacted Ether and stablecoin liquidity. Bitfinex also highlighted that August had the largest red monthly candle for BTC since the bear market bottom in November 2022, with a decrease of 11.29 percent according to Bitfinex data.
The analysis also identifies the return of event-based volatility, where isolated events can have a significant impact on prices and market movements. In August, two specific events had a notable effect on Bitcoin prices. A flash crash on August 17 resulted in an 11.4% selloff for BTC, while Grayscale's partial legal victory over the Securities and Exchange Commission on August 29 led to a 7.6% price jump within two hours. Bitfinex believes that the low liquidity in the market has allowed such isolated events to have a more significant influence on market movements.
The analysis further notes that Bitcoin open interest has outperformed the broader crypto markets, primarily driven by increased institutional interest and wash trading on some exchanges. On the other hand, Ether futures and options have witnessed a significant decline in 2023 compared to previous years, with a daily volume of $14.3 billion, representing a nearly 50% drop from the two-year average.
Bitfinex highlights that the trajectory seen in the derivatives market, specifically in open interest across both futures and options, aligns with the patterns of low liquidity observed.
Published At
9/14/2023 9:00:00 PM
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